by Peter Sondergaard | November 26, 2013 | 1 Comment
New research recently published by my colleague Ken McGee examines how CEOs are typically hiring chief digital officers (CDOs). It’s hard to know what’s going on under the cover with internal direct hires and internal referrals, but he learned a lot by talking to senior recruiters about their experience working with clients.
Ken’s research is interesting on several different levels, but one aspect in particular really struck me. It is that many of the search requirements provided by clients lacked the clarity and certainty about digital business and objectives for a CDO that usually accompanies the specificity for virtually every other C-level executive search.
You probably just read that sentence twice. That’s right; CEOs don’t know why they want a CDO or what the CDO will do.
Hold on a minute there, CEO! More haste, less speed is needed here.
We believe that executive uncertainty about digital business and what they expect to gain from a CDO will likely result in valuable time being lost to any number of flawed CDO search false starts and failed outcomes. This will only aid competitors who already have a better understanding about their digital business strategy and the value that a capable and effective CDO can deliver to their enterprise.
So what’s a CEO to do? Put simply, we recommend putting the horse before the cart, not the other way around.
First and foremost, CEOs need to determine whether their enterprise should create a digital business strategy. This should be a key discussion within an existing enterprise-wide planning process that involves the entire C-suite or, alternatively, a separate planning program to kick-start the process of discovery thoughtfully. The outcome should be a definitive, declarative and board-ready position on what digital business means to their enterprise.
CIOs have a critically important role to play in this process. They should offer a briefing on digitalization that is specifically modified for each c-level executive and outline the potential implications that digital business could have on each senior executive’s area of responsibility. This is the foundation to building a clear understanding of the business need and the potential business value. This will, in turn, provide the foundation for a CDO search, based on definitive business requirements.
Until a business need and broad objectives are agreed, chief talent officers should strongly advise CEOs against commissioning a search for a CDO in advance of clearly defining the role.
After all, how can you find what you need when you don’t know what you’re looking for?
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by Peter Sondergaard | November 6, 2013 | 2 Comments
The new digital industrial economy will have a massive impact on major technology vendors. This in turn will create both exciting new opportunities and intense challenges for CIOs.
Most vendors will need to radically transform their offerings to remain competitive and relevant to their customers, many of whom will also digitalize their offerings in order to succeed. The pace of this change will be at the speed of digital and, as a result, we predict that many of the vendors that are on top today will be fighting for their lives tomorrow.
Why? Let’s take a step back so that we can see the future a little more clearly.
The top technology companies have reigned over the industry for long periods — a decade, sometimes even longer. But what they sold you in the past, and what they are selling you today, is not what you will need for the digital future.
On top of this, vendor channel strategy, sales force and partner ecosystems are being challenged by different competitors, new buying centers and changed customer business models. To add fuel to the fire, digitalization is creating accelerated technology-driven startup environments around the globe.
We know that most suppliers don’t dominate from one generation of IT to the next. Many of the vendors that are on top today, like Cisco, Oracle and Microsoft, will need to change radically if they are to retain their market leadership in the new digital industrial economy.
CIOs can see this coming. They tell us they expect different vendors to lead the next wave of innovation. Our latest CIO survey, the results of which are currently being analyzed for publication in early 2014, show that two-thirds of CIOs expect to change their primary suppliers by 2017.
Let me say that again: Two-thirds of CIOs expect to change their primary suppliers by 2017.
But there is some good news for vendors. CIOs will be spending more, not less, on technology in the foreseeable future. The challenge for vendors will be to offer products and services that meet customers’ new requirements, not fighting for a shrinking slice of a withering pie. For the year ahead, Gartner reports that the IT market is growing at a modest 3.2% annual growth rate. In two years, the combined IT and telecom market will hit nearly $4 trillion, or roughly 5% of World GDP.
Looking more deeply at IT spending, a couple of things that are important for CIOs and vendors alike stand out.
First, consumer technology spending is outstripping business and government technology spending. Annual spending on consumer devices will be four times that of business and government.
Mobile smart devices have taken over the technology world. By 2017, new device categories such as mobile phones, tablets and ultramobile PCs will represent over 80% of device spending. In fact, by 2017, nearly half of first-time computer purchases will be a tablet. To put this into context, this category barely mattered a decade ago.
So mobile will be your destination platform for all applications.
Second, the way CIOs need to look at data centers is also shifting. Right now the data center market capacity is about 80% private, meaning the servers and infrastructure in your data centers. That will shrink to 65% in just four years.
We are firmly in the era of cloud operations and the approach for private data centers has changed. About 20% of spending will be on hyperscale systems, using the model that the global cloud leaders like Google and Amazon pioneered, delivering massive scale.
Change is inevitable. We believe that accelerated vendor leadership changes are on the near-term horizon. These new leaders will drive a fundamental shift in the strategy of their organizations. As a result, CIOs will need to prepare — at least half of the strategic vendor relationships they have today will be with previously unimaginable new partners in the future.
We’ll talk more about these issues at Gartner Symposium/ITxpo in Barcelona, Spain next week. Will we see you there?
Category: Uncategorized Tags: symposium
by Peter Sondergaard | October 31, 2013 | 2 Comments
The digital world is upon us. Every budget is an IT budget. Every company is a technology company. Every business leader is becoming a digital leader. Every person is becoming a technology company.
Welcome to the Digital Industrial Economy.
If you’ve already attended Gartner Symposium/ITxpo in South Africa, Japan, US, India or Australia this week, you’ll recognize these opening remarks from our analyst keynote. And judging by the literally hundreds of CIOs I have spoke to over the past few weeks at these events, we’ve captured the attention, mood, hopes and, quite frankly, many of the fears of our attendees.
One of the questions we address directly in our opening keynote is about “digital” itself. Basically, what is it?
First, it’s not digitization. That is about zeros and ones. Digitalization is about something much, much more. Something altogether bigger and fundamentally more important. It’s about the transformation of your business.
Digital business applies unprecedented combinations of new technologies to generate revenue and value. It starts with digital assets and capabilities.
For business, it means digital products, services and customer experiences conducted through digital channels from the front office all the way through the value chain. For governments, it means digital services to constituents, more transparency and higher mission effectiveness
Digitalization exposes every part of your business and its operations to the Nexus of Forces (where cloud, mobile, information and social technologies meet) and the Internet of Everything. It is how you reach customers and constituents, how you run your physical plant and how you generate revenues or deliver services.
No matter what business or service you deliver today, digitalization is changing it. The changes we see in media and digital marketing are just the beginning. If you work in agriculture, mining or manufacturing, digitalization means a new opportunity for you as well. If you deliver public services, digitalization allows you to better engage with your constituents where they are in the moment.
And the way your business runs, your internal operations, are changing too as digitalization is becoming pervasive inside organizations, shortening time cycles. For example, to a chief marketing officer, what happens with a customer in the moment can make all the difference. S/he can commission a successful mobile app-driven campaign that sees payback in a matter of weeks. That’s the time it takes a typical IT organization to just gather requirements.
We are seeing the cost for the basic hardware building blocks of the Digital Industrial Economy, such as sensors, radios, and microprocessors are plummeting. In 2009, 0.9B sensors and 1.6B personal devices — so roughly 2.5B “things” — were connected. But by 2020, that will grow to become 30B “things”. In fact, by 2020 all products costing more than $100 should have sensors embedded, even if you don’t know what to use them for.
Digitalization will change the way we all think about technology and, after talking to CIOs at Gartner Symposium/ITxpo across four continents in the last few weeks, it will fundamentally change the way we need to lead our organizations to be successful in this new digital world.
So if you haven’t attended Gartner Symposium/ITxpo in order to figure out what all this means for you and your organization, don’t worry. There’s still time to register for Sao Paulo next week and Barcelona the week after!
Category: Uncategorized Tags: symposium
by Peter Sondergaard | September 30, 2013 | 5 Comments
We are entering a new digital industry economy where everyone will be a technology company. How will you lead your organization to compete in this digital world?
Over the course of the next six weeks, this is one of the challenges we at Gartner will explore with more than 20,000 CIOs and senior IT executives as they converge from all over the world to attend Gartner Symposium/ITxpo in the U.S., Japan, India, Australia, Brazil and Spain.
If you’re planning on joining us, let me give you a sneak peek into one of the themes we’ll discuss during the event. If you’re not currently registered to attend, I hope to leave you thinking that you’d like to join us!
I have the honor of opening Gartner Symposium/ITxpo by delivering a keynote presentation, accompanied by several of my colleagues in Gartner research. It sets the theme for the event. In this year’s keynote, we’ll share that we’re on the threshold of a new era — a new era we call the digital industrial economy. It’s an era of profound change that will see every industry digitally remastered. The impact on CIOs, senior IT leaders and the IT organization will be colossal as the organizations they serve adapt to survive and grow.
Let me explain.
We see digital disruption occurring at three levels within the private and public sectors, at different paces in different industries. This disruption is being powered by what we call the Nexus of Forces, something we have analyzed in depth over the past couple of years. This is the convergence and mutual reinforcement of four interdependent trends; social, mobile, cloud and information (or big data, as others like to call it).
At the first level of digital disruption we see the use of ubiquitous cheap Internet-enabled sensors improving products, services and processes in a fairly linear manner. Think of this as the Internet of Things in action; sensors in your stuff that basically make them better.
For example, the use of SenseAware by FedEx to provide you with near-real-time information about your package as it travels around the world. Or the Smart Ball by Adidas. It’s a football (I’m Danish, so that’s the round ball you kick, not the egg-shaped one you throw) that provides players with information on how to improve their technique. I could also use the example of how a sensor on a diaper alerts parents of the need for a change, but in my experience babies already let you know pretty loudly when they need attention!
At the second level of digital disruption we see something more than just linear improvements from the use of digital technologies in existing products and services. We see business models fundamentally changing due to previously unexpected new entrants into established markets.
For example, driverless cars by Google have the potential to radically change the automotive industry. Is the idea of buying a Google car so farfetched? And the impact of digitalized cars doesn’t just affect automotive manufacturers. If we’re not far from seeing driverless cars on our roads, what will it mean for the insurance industry? Will personal risk profiles for drivers mean anything when you’re not actually driving? What does this mean to your insurance policy? To insurance companies?
Another example a little closer to the here and now in this second level of digital disruption is the impact of Kickstarter on the venture capital industry. This is not a linear improvement in the VC industry — it’s a whole new competitor that was previously unthinkable just a short time ago.
But where we see the most radical change as a result of digital disruption is at a third level. This is where everyone becomes a technology company.
Everyone becomes a technology company?
Think about it. Hotel companies used to compete against other hotel companies by offering differentiated products and services based on technology. Remember when cards replaced keys and you could charge stuff to them? Cool, in a ‘90’s kinda way. Then along came Expedia, Hotels.com and others. They raised the stakes and changed the nature of the game, as customers were able to access competitive price information with just a click. But now hotel companies see a bigger competitor on the horizon and it’s more powerful than any fancy new technology feature or a new entrant into the marketplace.
That competitor is you, their customer. Everyone is a technology company!
AirBnB turns you, their customers, into their competitors. Got a spare room? Rent it out by the night. Last night, 40,000 did just that by renting accommodation in 250,000 rooms in 30,000 cities in 192 countries.
It’s not just hotels. Your car is sitting idle at the weekends or during work hours? Rent it out for a couple of hours with RelayRides. Need a loan? Skip the bank and borrow from each other. Prosper has nearly 2 million members that have lent over $600 million.
Getting the picture? A new digital industrial economy is emerging.
So you’re a CIO. You’re helping your organization compete by making it easier for your business to sell and your customers to buy. You’re probably even better than those other companies in your marketplace. But how will you help your enterprise compete when you’re not just competing against other providers, you’re now competing against your customers?
If you think this doesn’t apply to you and your organization, think again. Manufacture trains? You probably won’t see a left-field entrant from another industry compete with you anytime soon, but your biggest competitor now is probably your customer. It’s a commuter with a car who can now advertise a ride and connect with another commuter who prefers to pay per journey via her mobile device for a fraction of the cost of a ticket. The customer doesn’t care about SIC codes.
This is the challenge we will explore at Gartner Symposium/ITxpo. In more than 500 analyst presentations and during thousands of one-on-one analyst meetings and roundtables, we’ll provide attendees with the information, insight and advice they need to understand how these changes will affect their organizations, their industries and their roles and what it means to them to lead this digital world.
Are you coming?
Category: Uncategorized Tags: symposium
by Peter Sondergaard | September 10, 2013 | 1 Comment
You’ve probably heard it many times yourself, but in my opinion very few quotes relevant to the IT industry measure up to the iconic words of Jeff Immelt, CEO of GE, when he said: “More people will graduate in the United States in 2006 with sports-exercise degrees than electrical-engineering degrees. So, if we want to be the massage capital of the world, we’re well on our way.”
Has anything changed since 2006? Everything and nothing.
Enrollment data for Science, Technology, Engineering & Maths (STEM) in the US shows that the growth rate was 8.7% from 2007 to 2011. But not everyone graduates from the course they start. Georgetown University estimated that out of the students admitted in the STEM degree courses only 62% emerge as a STEM graduate.
So STEM graduations are on the up, but at nowhere near the pace needed to meet the massive demand for their skills driven by the digitalization of business.
This has lead to a jobs crisis in IT today. Seven years after Mr. Immelt called time on the challenge we face to meet the needs of the IT economy, our challenges are only getting tougher.
Undoubtedly, Big Data is the accelerant being poured onto the fire under this burning bridge for CIOs. If you were one of the 6,000+ CIOs who attended Gartner Symposium/ITxpo last year, you’ll remember us stating that Big Data is creating big jobs. We predicted that 4.4 Million IT jobs globally would be created to support Big Data by 2015 but only one third of those jobs would be filled.
As stocks reduce and the fish get harder to catch, the net is getting wider and wider to satiate the CIOs hunger for talent.
Our recommendations then still apply. They were:
- Begin now to retrain senior staff in advanced statistical analysis, information management and visualization principles. Even if they are not assigned to big data initiatives, being skilled in these concepts will be fundamental to success in the coming years.
- Develop distinct business cases and evaluate their benefits, with costs for premium skills in mind.
- Determine what new roles will be needed, and begin to train or acquire the information skills needed to leverage big data strategically.
- Develop new hiring practices to recruit for the new nontraditional IT roles, such as linguists, artists and designers. Recruiters ought to be prepared for a dearth of candidates.
In our preparation for the upcoming Gartner Symposium/ITxpo series, we have learnt that CIOs in leading organizations are seeking to overcome this skills shortage by recruiting from a much broader field of talent. CIOs are finding the problem-solving and analytical skills they need for their organizations among biology and chemistry based graduates, most notably those found in the pharmaceutical industry. And even in other large economies where STEM graduation rates are higher, such as the UK and Germany with growth rates of 10.6% and 23.9% respectively, demand outstrips supply.
Long term, fishing in other pools for talent this isn’t a sustainable solution. It’s merely a stopgap that can’t possibly cope with the cataclysmic changes we face to adapt to the rapidly changing demands of our industry.
At Gartner Symposium/ITxpo this year, we will introduce the concept of the new digital industrial age. We will talk about the leadership, skills, resources and technologies that are needed to succeed as we enter this new digital industrial age. And we will share how we believe entire industries will be reshaped, digitally re-mastered in fact, and what it will mean to lead in the digital world. We believe this requires us—demands us—to fundamentally rethink how CIOs and their c-level colleagues face the future.
In my next post, I’ll share a deeper insight into these ideas and will ask for, and greatly appreciate, your feedback.
Category: Uncategorized Tags: symposium
by Peter Sondergaard | August 15, 2013 | 11 Comments
There is an enormous new revenue opportunity for CEOs of asset-intensive industries to extend the value of existing products by unlocking and monetizing the data they create.
Got your attention?
Consider this example: An elevator company packages and sells the data it collects to landlords. An elevator company? Collecting data? Selling it? Talk about thinking outside the box! (Sorry, couldn’t resist.)
Think about it. The elevator company tracks how many people access each company on every floor in the office buildings it services. Once it pairs that information with publicly available financial data for those companies, the elevator company can then advise landlords on which companies will likely require additional floor space due to growth. On the flip side, the elevator company can alert the landlord about declining traffic to a particular office. If that information correlates with a decline in financial performance for that firm, it provides a warning signal that the tenant might be at risk of defaulting on or not renewing their lease. Insight like this is worth a lot of money to landlords.
How did the elevator company come up with the idea for this new product based on an existing asset? It wasn’t a spontaneous “aha” moment. It was the result of focused innovation.
Enter the chief data officer (CDO). The CDO’s job is to find new digital revenue from existing physical assets. The CDO guides the organization from not knowing what they don’t know about the data locked in their assets to actually doing something about what they know.
And I already know what you’re thinking. Another “chief of this and that?” Another title du jour that CEOs are expected to fund? Actually, no, not this time.
The CDO is actually best placed in direct support of executives already responsible for product development. That way, the CDO’s focus is locked squarely onto a specific asset or product. The CDO can unlock the value of data or information from the product or information that is related or valuable to the product. The CDO should also collaborate with peers throughout the organization to help the existing product development teams do what they do best: develop products.
Contrast this to the predicament that a shiny new CDO would encounter if reporting to the CEO: a hostile C-suite of peers resentful at the prospect of losing another source of innovation and revenue to the new-fangled title on the other side of the boardroom table. This all-too-often spells trouble, heartache and, frankly, disaster.
We advise CEOs to empower existing product leadership teams with focused talent that can find new sources of revenue from their assets, rather than set up another isolated C-level player who may fail in a power struggle for access to data.
Even though we recommend that CDOs, in most situations, should reside within the business units, CEOs must be actively involved in developing the priorities and objectives of the role. The CEO is ultimately responsible for the digital strategy of the organization and responsible for unlocking the corporate value of information in the organization. The CEO must own and drive the digitalization of the organization.
All this begs the obvious question from the CEO: I thought we were supposed to hire a chief digital officer? Is this some kind of CDO-bake-off? I’ll explore this in my next post.
Category: Uncategorized Tags: symposium
by Peter Sondergaard | August 3, 2013 | 1 Comment
The only certainty in the business of technology is change and the combined forces of cloud, mobility, social collaboration and information—something we at Gartner call the nexus—is dramatically accelerating the pace and impact of IT-led business transformation.
Our research agenda, which is reflected in this year’s Gartner Symposium/ITxpo agenda, (http://www.gartner.com/technology/symposium/) continues to focus on each of the four forces of the nexus and how their confluence is changing the IT industry, the use of IT in organizations and the IT organization itself.
For example, we examine how the shift to cloud computing is really about the industrialization of IT, turning the “guild of IT” from a craft into an industrial activity. We explore how mobility is driving pervasive access between people, between machines and between people and machines. We continue to conduct researched into how social collaboration is enabling extreme collaboration that is forever changing the way software is designed. And lastly how information (okay, okay, Big Data if you prefer that term, although I vehemently try to avoid it – a future blog post for sure!) is creating an ‘information layer’ in the enterprise that is driving innovative new revenue streams.
These four forces—individually and in concert—are driving unprecedented change in traditional IT. But our research also indicates they are fundamentally, and profoundly, changing business itself. See this segment from last years Symposium Keynote: http://www.youtube.com/watch?v=EdRRiSSU04c
One example of this change driven by the nexus is the inexorable relationship between IT and product development. How so? Well, if you are a CEO, ask yourself this simple question; Who should now be responsible for leading product development and management? The answer is not as clean cut as it once was. Let me explain why.
Historically, in both product-centric and services-centric businesses, product development and management rarely engaged with the IT organization. Today, it couldn’t be more different.
I often speak to executives in services-centric businesses such as banks where product development and management now resides with the CIO. We believe this will become the norm across all services-centric businesses.
We are starting to see the same shift in product-centric businesses. In recent conversations with c-level executives of car manufactures and consumer packaged goods businesses, we have discussed this very point. It is clear from my conversations that CEOs are not fully engaged in what the future structure and governance model of product development and management should be. This will become an increasingly urgent issue to resolve as information, or data, continues to be a strategic asset for organizations. It will also become a high-stakes competitive negotiation within the c-suite for ownership of the information that is generated by products but also used within corporate IT systems.
So what should a CEO do now? First, find out more from your CIO and product development and management team about functional leadership, collaboration and performance. Ask yourself, and your team, the uncomfortable question about who should now own the product development and management process now that the fundamental relationship with and importance of IT has changed.
Category: Uncategorized Tags: symposium
by Peter Sondergaard | July 24, 2013 | 4 Comments
One of the great things about my role is reviewing our research. This is how I mostly spend my all-too frequent travel time flying between continents. So while the latest movies are keeping my intrepid fellow travellers occupied for the long haul, I’m usually reading research as part of our peer review process or when it has just been published.
Somewhere over the mid-Atlantic, an interesting new research note really caught my attention on the need for a Chief Digital Officer (CDO) by Laura McLellan, Yvonne Genovese and Dave Aron. The authors explore the important question of whether the emerging digitalization of business creates a requirement for CEOs to have someone new report to them who is responsible for the enterprise wide digitalization of business. They also address whether or not business unit leaders need this role.
Of particular interest, the analysts note:
- Not one but several roles of digital leadership are emerging
- Some CIOs will add digitalization responsibility to their role but a large number do not yet have the capabilities or trust of the organization
- The need for this role will vary dependent on industry and maturity of the organization
Clients can read the research note, including a toolkit on the Chief Digital Office, by clicking here.
The research note follows other pieces of research that Gartner has written over the past year about the CDO role. It is clear to us that as organizations continue to digitalize processes, client facing activities, their products and/or services, there is a growing need for business leaders to add a deep level of understanding of technology to their skills. As every budget in an organization gradually becomes digitalized, this need grows.
But here’s the question. Does this requirement lead to the need for a new, separate role reporting to the CEO? Even to a business unit leader? And if so, is this role really sustainable long term? In a recent conversation I had with the CIO of a large global retailer we discussed just this question. We came to the conclusion that the answer is no. Why?
- Organizational roles that are persistent in time carry a degree of accountability, budget and potentially people responsibility. I am not sure long term the CDO does.
- The aggregate responsibility of a CEOs management team changes only slowly. While technology has disrupted this statement, externalizing the responsibility from the current roles reporting to the CEO rarely leads to long term sustainable impact.
- Digitalization is a management skill set that will developed by many members of the leadership team, but it is not a separate role
This still makes the role of the CDO important, but mainly as a change agent, a role that will assist the CEO and perhaps boards of companies in the process of change driven by digitalization.
Now onto the next research note with 1000 more miles of cruising altitude to go before that friendly reminder to turn off all our electronic devices.
Category: Uncategorized Tags: symposium
by Peter Sondergaard | May 24, 2013 | 3 Comments
Its midday in London and I am sitting in the airline lounge waiting to go to the gate. Normally I would be killing time by catching up on email. If you travel, you do this yourself all too often. Today, however, I have a different purpose; I’m starting this blog.
As head of Research at Gartner, I spend a lot of my time with our clients, mostly CEOs and senior business executives. They know that technology now presents them with huge opportunities for innovation. At the same time, they struggle with their personal involvement in setting strategy, driving organizational changes and providing direction as a result of technology. This inspired me to share what I believe is a substantial change in management. It’s a change caused by technology. That change is the digitalization of business. And the fact is CEOs now own technology strategy and innovation.
So what do you do? Well, as I think about it from where I sit writing this blog post, we—that is to say business leaders—cannot afford to be comfortably killing time in the “airline lounge of management.” We need to act. Now.
I discussed this with a journalist at the Wall Street Journal here in London earlier today. We talked about the impact of technology on increasing revenue through monetizing data or information created by physical products. This is a huge opportunity in many industries today, but too few CEOs are acting. Certainly Jeff Immelt of GE has to be somewhat right; revenue created through using data constitutes the next revenue growth opportunity for GE.
The journalist and I discussed other organizations, specifically case examples in Europe. For example, Swiss Rail’s innovative usage of sensors in rail tracks to improve on-time performance. Another example is Siemens Building Technologies and their ability to optimize energy usage in office buildings. But in most cases the CEO is not directly involved. In most cases the CEO does not understand that every budget in the organization is becoming an IT budget and that digitization is radically altering the opportunities that exist to grow revenue. As we ended the meeting, the journalist and I agreed that we are undoubtedly entering an interesting period of significant change.
I think this period of digitalization of the business is well worthy of blog. I hope, in time, you agree. Stay tuned.
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